How to do business succeed?
2. Take your customers
Years after I first mentored Bobby and Helene Stone in business,
I’ve worked with a lot of people trying to start a business
as well as a lot of people who already have a business career.
They often ask me what makes a successful business,
and I answer them that the most important quality is resilience.
I’m talking about the ability to bounce back from failure,
turn things around,
and learn from mistakes.
Because everyone has to make mistakes from time to time.
And as long as we’re in business,
we’ll keep making mistakes.
Surely we all like to think that after many failures,
we will eventually become smarter and stop making mistakes.
Forget that thought.
You will never run out of mistakes
but can only hope that the new mistakes are not like the old ones,
but they will certainly be equally bitter.
They will also make you uncomfortable and out of control.
However, remember that failure is always your best teacher.
You will learn and become better if you are open to the lessons
from your failures and mistakes.
Here is a good example from my record-keeping company, CitiStorage.
I still remember the time,
many years ago,
when I found out we lost our biggest customer.
It was 5pm on a Friday.
A corporate salesperson called me
while I was driving
and said that we had just received a fax from a client,
a large law firm,
announcing the intention to move the archives out of our center hosting
when the contract period ends three months later.
In business, relocating file boxes is a difficult task.
In that process, customers not only lose time,
but also have to pay extra shipping fees for us.
Therefore, a client’s decision to relocate must be
due to certain reasons
and this was completely unexpected to me.
I asked, “What are you talking about?
How can we lose this customer?
What happened?”
My salesperson couldn’t answer,
and we couldn’t ask the customer either.
The person in charge of the law firm did not want to meet
or talk to us on the phone.
We only received a perfunctory response:
“We’ve made the decision, it can’t be changed.”
Obviously,
we felt dizzy.
The person in charge and contract
with this customer left our company five years ago,
and we didn’t care about this customer,
which we should have.
About a week after receiving the fax,
we figured out a way to get a meeting
with the client’s management,
a meeting that was completely ineffective.
We could have come up with a better financial deal,
but we couldn’t fix the mistakes we’ve made over the years.
Competitors have responded to customer care services and won customers.
So I called the managers and salespeople together and said,
“What can we learn from this?
What else should we do in the future?”
The real lesson,
I know, is not that we made a mistake,
but that it took us too long to find out.
We decided that,
from now on,
every 18 months,
we would visit the client once a month
before the contract expires and offer to negotiate a new contract.
If the customer hesitates,
it means there’s something wrong,
and then we still have time to fix it.
As soon as we started implementing the new policy,
we discovered something very important.
We have a lot of unhappy customers but we don’t know.
A customer was upset about our online information system;
then we fixed it.
Another customer feels they should get a discount
because their sales have skyrocketed;
That customer was right, and we made amends.
A third customer doesn’t like a point in our storage system;
and so we changed it.
The fourth customer was upset
because he did not receive a monthly report;
and we started sending them out.
Thus, in four months of implementing the new policy,
we made four improvements,
satisfied and retained four customers,
and all of this came from a single mistake.
And in the long run, that failure is one of the best things
that ever happened to the company.
****************
GROUNDHOG DAY
Of course, resilience won’t help
if you don’t learn from your mistakes.
That is a challenge for some people.
They suffer from what I call Groundhog Day syndrome.
It has to do with a tendency to self-destruct,
although you’ll eventually find yourself living
and dying over and over again more
or less like the character played by Bill Murray in the movie Groundhog Day.
For example, I know a person who,
after building a successful clothing business,
started taking out a huge amount of cash
from the sales to build a palace for himself and his wife.
When he ran into trouble in business,
he discovered that he had no resources left to overcome difficulties.
In the end, he lost both the company and the house.
So what did he do?
He started another clothing business, grew it,
and cashed in on another castle,
got into business trouble,
and lost both the company and the house.
One failure happens twice.
This is not as strange as you might think.
I know someone who has a habit of buying companies,
raising tons of money,
paying himself handsomely,
and boasting that the company will succeed.
He is convinced that every company he buys will be hugely successful
and that he deserves every penny he makes.
But he always returns to where he started:
broke,
and he repeated it five times.
Or as in the case of Ralph,
a friend of mine.
The business failed because he took on too much debt.
He was very good at starting,
growing and running it,
but then always borrowed money frantically
to pursue business opportunities.
He will do whatever it takes to get the credit he needs,
even using financial statements to “solicit” loans everywhere.
He has no intention of defrauding anyone
but is simply so focused on growth
that he doesn’t consider the possibility of mistakes.
Of course,
when you push things too far,
they run the risk of going astray.
Sooner or later,
Ralph will get in trouble.
Cases like these are a bit extreme,
but Groundhog Day syndrome is not uncommon.
To some extent,
we all have habits of mind
and ways of thinking that get us into trouble time and time again,
and it’s very difficult to change them.
However, we do not like to admit that
we are the cause of our problems.
Most of the time we try to find the culprits for the problem,
people who don’t do what we want
or are out of our control.
It’s a lot easier to blame our unhappiness on others than it is to take responsibility,
so we never blame ourselves.
But in the process, we only harm ourselves.
The most valuable business lesson we can learn comes
from being brave enough to face our own weakness.
What I say here is drawn from my own personal experience,
specifically from the experience of my biggest business failure,
the 1988 bankruptcy of my mail company.
Starting from scratch,
I built Perfect Courier into a $30 million sales business that made it
to Inc’s 500 fastest growing companies list for three years,
then merged with a publicly traded company, CitiPostal,
and entered the list of 100 fastest growing public companies on the list of Inc. 1987.
But I’m still not satisfied with that result.
My goal is to have a $100 million company.
So when an opportunity to “take a shortcut” presented itself,
I immediately took it,
merging with a $70 million company called Sky Courier in 1987.
But as it turned out,
Sky brought trouble huge problems for the mail company.
At first, it needed a $5 million cash injection to keep it afloat.
I decided to withdraw money from Perfect Courier,
and it wasn’t exactly a mistake.
Even if Sky fails and the investment is lost,
Perfect Courier is still able to survive
and grow at current levels.
But I quickly realized that $5 million wasn’t enough.
Sky needed another $2 million
and I decided to take it from Perfect Courier too.
In addition,
I then agreed to pledge several million dollars
of Perfect Courier credit to help maintain Sky.
Those two things are very serious mistakes.
They ruined my mainstream business.
I knew that if I lost this second funding,
Perfect Courier would suffer.
And even worse if we had trouble with the credit guarantee,
Perfect Courier could go bankrupt.
Although it was dangerous,
I never even thought of retreating.
I don’t think I have to.
I’m sure I can handle anything.
I have been in such a difficult situation before.
I think I’m undefeated and because of that,
I don’t consider the unexpected.
The first was the October 1987 stock market crash.
This event had a particularly strong impact on printing companies
that do business with Sky.
Overnight, Sky lost 50% of its revenue.
At that time,
the fax machine,
which lasted about 20 years,
suddenly reached the “mature” stage,
and quickly destroyed the mail business.
Instead of transferring documents through the postman,
people use fax machines to deliver messages and papers.
In about a month, Perfect Courier’s business dropped 40%.
The combination of those events created great pressure for us.
In September 1988,
my company filed for creditor protection
under Chapter 11 of the Bankruptcy Code.
Three years later,
when our offer for creditor protection was accepted,
the number of employees had dropped from 3,000 to about 50,
and sales had plummeted from $100 million to 2,5 million dollars.
It was really a big shock.
It took a few years for me to regain the wisdom to find
and understand what really happened,
and why.
That process happened in part
because I had very good excuses.
After all, who would have guessed that the stock market crash
and the advent of the fax machine would deal such a heavy blow to us?
However, in my heart,
I know that blaming circumstances is irresponsible.
The real question is,
how much has the company been harmed by these developments?
I find it extremely difficult to face the answer to that problem.
It meant acknowledging that
bankruptcy had a lot to do with my personality
and decision-making process.
However, in the end I forced myself to realize
that those things were true.
I had a great,
secure business,
and I destroyed it by pushing it into a risky process
that shouldn’t have been.
The main cause of that problem is my personality.
I like to take risks, like to go to the edge and look down.
That comes from Groundhog Day syndrome.
I was foolish to take too much risk
and destroy everything I had.
As a result,
hundreds of people lost their jobs,
and many more myself included suffered from
the nightmare of business bankruptcy.
It’s hard to admit my mistakes,
and facing my own mistakes has been one of the hardest experiences
of my career.
I don’t intend to change my personality.
I know I can’t,
and I really don’t want to.
I wanted to start focusing on what I could do
to avoid getting into the protagonist’s shoes on Groundhog Day.
For example,
I’ve found that I rarely listen to other people’s advice
and therefore often ignore helpful advice.
So I train myself to listen to make sure
I at least understand other people’s advice,
whether I accept it or not.
I also decided to seek out the views of people I respect,
even though they have a completely different way of doing things than I do.
I made a few rules that forced me
to think about the consequences
of important decisions before taking action.
Most importantly, however,
I adjusted my thinking about risk-taking.
Do not misunderstand me.
I’m still a risk taker,
but these days I would calculate and think twice before taking risks.
And that was the most important lesson
I learned during that period of my career.
It is also from the pain of having to lay off employees
that I understand more about the noble responsibility
of CEOs for their employees’ lives.
With that in mind,
I created an ultimate rule for evaluating important decisions:
in any case,
the core objective of the decisions should
still be to protect the company.
When you have a viable,
progressive business,
you must put its welfare first
and never do anything that could put it in jeopardy.
Investing in a venture is also a good thing,
as long as your mainstream business is safe.
It’s a strict rule that
I’ve absolutely followed since my first mistake.
My business has grown stronger,
and I feel happier as a result.
************************
CONCENTRATE, CONCENTRATE, CONCENTRATE
Besides resilience and the ability to learn from mistakes,
what businesses need is the ability to be disciplined and focused.
People who have never built a business will certainly not be able
to understand that.
They believe that the secret to success lies in seizing great opportunities.
I remember the other day
when an old friend came to visit my filing company.
He hadn’t been there in years and so,
when he saw thousands of boxes in the warehouse,
he couldn’t believe his eyes.
“It was incredible,”
he said,
“I saw an opportunity,
and overnight I turned it into a thriving business.
How surprising!”
I think he should have known that up until that point,
I had spent over a decade building this company,
but that seems like something a lot of people don’t like to hear.
They like to think that successful businesses have a magic hit.
All they need is a good chance and baa!
it turned into a thriving business.
It’s a “myth” in business,
and it makes it difficult for many people to start a business.
They waste time and money researching
and pursuing business opportunities,
hoping to identify one that guarantees success.
The world is filled with great business opportunities,
but none of them guarantee success.
Choosing an opportunity is easy,
the hard part and most importantly is developing the discipline
and stamina to focus on a single opportunity
until you turn it into a solid business.
Sure!
There are two stages in the startup process
where focus is so important,
but it’s often easy to get distracted
because there are so many different opportunities to choose from.
The first phase begins as soon as you are ready to act.
From this moment on,
many people have discovered
that they cannot focus on a single opportunity
because they are mesmerized by all the opportunities they see.
I often hear people say
they are looking at ten different business opportunities at the same time.
They wanted to ask me which one
I thought was the most promising.
I told them
“You asked the wrong question.
You should ask:
‘What business do I want to run?
What would I do best?
Which is the best fit for what I want?’”
If you’re serious about building your own business,
you need to start by choosing an opportunity out of the many,
a single idea that,
for whatever reason,
makes you attractive than other opportunities.
Then you need to study it thoroughly.
It would be better if you could schedule time to work in that business.
But you should at least learn everything about current companies
and business mechanics in the industry.
Those jobs include finding information from commercial organizations,
talking to people in related businesses,
interviewing customers, etc.
Always remember that you are preparing
for a long-term commitment.
I often say people should plan to dedicate themselves to the business
for at least five years.
That doesn’t mean you can neglect it afterwards,
but at work,
you need to dedicate yourself to the path you’ve chosen
until the company is solidly built.
This will take a very, very long time.
Therefore, it is important to decide whether you like the business
and whether it is feasible.
Do you have the resources and skills needed to succeed in this business?
Is it reasonable to think that a business will help you achieve your goals?
You will find that it is difficult to answer those questions
unless you focus on a single opportunity
and remove the rest from your mind.
The bigger challenge lies in the next phase,
after establishing a commit and starting to build a new project.
You will quickly discover that the business opportunities are more than you think.
You will find all of them extremely attractive.
If you’re not careful,
you’ll lose focus and your best chance for success.
You should only think of a single opportunity
when you are starting to build a business.
For example,
when you focus on the opportunity
to build a customer base to ensure business viability, that is,
your business can survive on its own on an endogenous cash flow.
Then the first thing you need to do is find out the type of customer
that will help you do that and how to attract them.
Then you need to focus relentlessly on building a customer base.
This is not simple.
It requires strict discipline,
although most of us often do not have this instinct.
Let’s go back to the Bobby Stone experience that I mentioned in chapter 1.
He is a prime example of this discipline.
Most of the beginning entrepreneurs I know have trouble staying focused.
They forget that when starting a business
In business, there are two limited resources,
time and money,
and you can’t waste both.
Of course,
I’m not saying you should keep your eyes closed.
Concentration is essential,
but it should not be too rigid.
After all, your approach is not necessarily successful.
My first approach to starting a record keeping business didn’t work.
When we started,
we didn’t have a source of information about the industry,
so we didn’t know the basics of the industry,
such as how to get customers
and how to charge each type of customer.
Later, in the mail business,
we succeeded by offering competitive prices,
excellent service,
and state of the art technology.
Our target customers are large law firms and accounting firms.
We set up a booth at the trade conference
where the managers of these companies attended,
and we achieved our goal.
We are committed to providing the most perfect service
they have never imagined,
at a price that is on par with the competition.
Actually, those prices are much lower than we would like,
but they are high enough to help us make a reasonable profit.
But the amazing thing is that we don’t have any sales,
not even a customer.
Our problem was that we had to change the whole way we sold
and priced our services before we could find a formula that worked.
The important thing is that you need to be both focused and flexible.
You can’t let yourself be distracted by too many opportunities,
but you also can’t think so narrowly that
you ignore the signs of trouble.
And there will always be signs of trouble.
A business idea rarely works exactly
as you originally thought it would.
Therefore, you need to find an effective way
to maintain the accuracy of that idea.
You must observe,
listen,
question,
experiment,
change, improve ideas,
and constantly grow your customer base.
That’s all it takes to build a business.
Most people will succeed if they do these things right,
as long as they don’t lose focus over the long term.
At the end of that thorny road there will be a great reward for you.
Eventually,
your business will reach a point where it doesn’t need you anymore.
You can then pursue other business plans that interest you.
Read more what rich men are doing? topic:
T. Harv Eker! Rich people are always learning and growing. The poor think they know it all.
Ask Norm
Dear Norm:
When I was in school, my father
and I made wooden household items to sell at craft fairs.
The business could easily grow,
but my father didn’t want to make it bigger.
Now, my brother-in-law
and I are talking about starting a home wood business
that can grow into a sustainable company.
The problem was that we had trouble figuring out how we would do it.
How two people without a lot of business knowledge can overcome the difficulty
of working on a problem they have never experienced.
Jace
Dear Jace:
It sounds like you have envisioned the company you intend to build.
I think you really have two problems to deal with.
Firstly, you are not confident enough in yourself.
In fact, you know more about the business than you think.
Second, you worry too much.
Before owning a factory,
you need to have a business,
and most businesses start out small.
My advice is to make a plan of what you
and your brother-in-law want to achieve in five years.
Then define a short-term goal.
You can follow in your father’s footsteps,
selling household wood at craft fairs.
When you sell, you build relationships.
Tell everyone that you are going to start a company.
Surely among them there will be people interested in helping you.
Also look for a mentor who has started a business in the field.
Lack of education at a young age is not a hindrance in business.
– Norm
************************
EXTERNAL VISION
Let’s take a moment to talk about the flexible part of expressions.
What I’m referring to here is “peripheral vision,”
or more clearly,
the ability to see things that are beyond your vision
and thereby find solutions to problems that
others have deemed unresolvable.
I ran into such a problem
when I started building a secure document destruction business
for businesses in 2000.
I foresaw and seized the right opportunity.
In a few years,
the company grew by leaps and bounds,
with sales growing 150% per month.
That’s great,
but it shows an important problem facing companies in the industry,
which is the lack of specialized software to track work done,
generate reports accounting,
and automate the invoicing process.
We looked everywhere for that software.
We talked to dozens of other companies in the shredding industry,
and discovered that
they had the same problem as us.
We also consulted outsiders,
looking for businesses that we thought had similar software
to what we needed such as bottled water distribution companies,
but received only a small fee.
The result is that they have the same problems as us.
We even contacted software vendors
for record keeping companies
and asked them to develop a suitable software
for the shredding business.
They said they would try,
but it took quite a while.
This service industry market is not large enough
for record keeping companies
to invest significant costs in document destruction software.
That’s why they told us:
“Wait a few more years”.
But we can’t wait.
Without the right software,
we were forced to do all the tracking and invoicing by hand.
The invoicing process alone took us three to four days a month,
and more importantly,
the probability of error was very high.
Invoices are inconsistent and customers will complain.
Moreover, with revenue growing rapidly,
we fear that the calculation situation will get worse in the future.
“We have to do something,” said Sam,
my partner.
“Agreed, but for what?” I ask.
“I don’t know,” he replied.
“People always say this is impossible,
but I think there must be a way.”
When I heard that statement from Sam,
I decided that no matter how hard it was,
I would have to find a solution.
What makes this difficult is the variety of services in the shredding business.
For example,
about 40% of our company’s revenue comes from special services,
called “clean up”.
We offer this service to companies
that have accumulated a huge amount of sensitive records
over a long period of time
and want to destroy them all at once.
We pick up the documents,
carry and incinerate them and then deliver
to the customer a certificate confirming
that the records have been safely destroyed.
The remaining 60% of revenue comes
from customers using the periodic document destruction service.
These customers keep locked bins at their company.
Each bin has a small slot for employees
to put in sensitive documents that need to be destroyed.
The problem is that there are two types of buckets
with different management.
Some bins look like a wooden cabinet
and we call them file cabinets.
Periodically, our staff comes to clean the documents
and return the drawers to their place.
The second type of bin looks like large plastic trash cans with wheels.
We call them file bins.
For customers who use this type of bin,
periodically our staff will come and push the full bins away,
and replace the empty ones in them.
So we have a wide variety,
some kept in place,
and some moved,
plus a number of other special service crates.
In addition, we have different bin sizes,
prices and payment terms for each customer,
based on the number of bins,
bin size,
cleaning frequency,
and other factors.
We needed a tracking,
invoicing system that could resolve all those discrepancies,
but figuring it out wasn’t easy.
If you find a software that can handle stationary bins,
it is not suitable for mobile bins,
and vice versa.
Furthermore, the software
that deals with the bins is not applicable
to other special services.
That’s why people still haven’t found the most suitable software.
However, in my heart,
I knew we were all approaching the problem the wrong way.
People are always looking for a complete solution,
a software system that can handle all the services a shredding company needs.
But instead of looking for a piece of software like that,
what if you found one that solves each part of it?
I can’t describe exactly how I found the answer,
but it included the use of peripheral vision.
I know that others were focusing on exceptional service,
so I decided to start from a different angle,
looking at the file bins.
Either way, I believe that one day,
I will walk into the office of Louis Weiner,
the company’s president, and declare, “I’ve got it.
We can centralize all the shredding work in one computer,
and we don’t need any other new software or equipment.”
Actually, I still don’t have a complete solution to that,
there are still parts that I can’t think of,
but I have a feeling I’ll figure them out when I talk to Louis.
He looked at me with suspicion.
“Okay, tell me,” he replied.
“We can use the same system with all the boxes,” I said.
I explained that, in the record keeping business,
we look up file boxes with barcodes and hand scanners.
We send a copy of the barcode to the customer,
and then they stick it on each box.
When the driver comes to pick up the boxes,
they scan their barcodes.
The scanner will issue a receipt
and the driver will give it to the customer.
When you get to the office,
the information will be loaded into the computer,
then the computer will automatically invoice and report.
“What are you thinking?” Louis asked.
“Put barcodes on every filing cabinet?”
“Something like that,”
I said, “You could stick a barcode on every filing cabinet.
With the file bin,
he just put a small plastic tube in the back. In the tube,
he placed a barcode tag identifying the bin location,
customer,
size,
and type of bin.
When the employee arrives,
he will scan the barcode and move the card to the new filing bin.
Therefore, the barcode remains where it was.”
Louis thought for a moment, then he said,
“Okay, what about special services?”
“Ah, what about them?” I ask.
That’s the part I haven’t thought of.
“They make up 40 percent of our work,” he said.
“It’s not like that,”
I said. A thought suddenly crossed my mind.
“They make up 40% of our revenue.
So how many special services do we have each month?”
“I don’t know,” he said.
“Five or six, ten at most.”
“And we have about a thousand barrels, right?” I ask.
“Assuming we treat each bin as a separate job,
let’s say we empty the bin once a month.
Now, we’re talking about 10 jobs out of 1010 jobs.
That’s not 40%.
It is less than 1%.
That means we’ve solved 99% of the problem.”
Louis muttered.
“And how long will it take us
to enter information about ten special services in a month?”
I continue. “Fifteen minutes?
Or half an hour? I think that’s not a problem.
We can easily finish them by hand.”
Louis sat thinking.
Then he began to nod.
“Looks like it’s worth a try,” he said.
However, that solution is not as simple or perfect as initially thought.
We had to do a few tests to find out which barcodes worked best.
(In the record keeping business,
we use different types of barcodes for different purposes.)
In the end,
we choose one that can give us all the information we need
but cannot be applied to more than 9999 cartons of all sizes.
That kind of barcode will be effective for a few years,
and by that time we’ll definitely have another to replace it.
At that time, we solved the problem of tracking-invoicing,
creating a new utility for customers:
processing receipts and invoices by computer.
As the system allows us to have better lookups,
it also helps customers better track what we do
and feel more confident in the accuracy of our invoices.
That’s the advantage we have over our competitors,
at least until they develop their systems.
Read more amazing topic:
CHARACTER FACTORS
There’s still another quality you need to be successful as a business owner
and maybe that’s the most important.
It should be noted that it is a quality
that cannot be conveyed or comprehended.
Either you were born with it,
or you didn’t.
Don’t misunderstand me.
Of course you can always learn everything you need to know about starting
and growing a business.
While not every new business is possible,
as I mentioned certain habits can help you grow
and certain principles will help maximize your chances of yours success,
and minimize damage in the event of a failure.
Ask Norm
Dear Norm:
I started changing my career when I was 49 years old.
I started the trucking business in 1975.
In the mid-1990s we had 29 employees,
and I decided to sell the company to raise money,
cash in 1997.
After that deal,
I took a nine-month break,
built a house, and started looking for a new career.
Finally, I found a job selling for a computer company,
where I had a dispute with the owner.
Since I’ve never been an employee,
I can’t “swallow sweet soap”.
I was fired after two years for failing to obey my superiors.
After resting for a while,
I returned to the labor market motion.
I just wondered if I was too stubborn to work for others.
Can I be a happy employee?
Will I have a chance,
or will they get rid of the unruly horses?
Bruce
Dear Bruce,
Many of us are too stubborn to be employed for long periods of time.
I know I can’t work for other people anymore,
but that doesn’t mean I can’t work for others.
Think about being an independent contractor outside sales,
for example.
If you really want to run a business,
find a small company that
needs help from an experienced entrepreneur.
If that still doesn’t work,
it’s better to start your own business.
– Norm
But to apply it successfully,
you need something else.
It’s an instinct,
not a skill,
and it’s deep within you.
I’m not even sure its owners realize it
until they’ve been tested.
But realized or not,
the quality I am talking about is real,
and it can help some people achieve things that others cannot.
Consider the case of Malki,
a friend of my wife, Elaine.
As a separated mother of three,
Malki has to make a living by tutoring,
teaching,
and working as a secretary.
However, she was not satisfied with those jobs.
Her dream is to have her own daycare center.
She told Elaine about it,
and Elaine told me.
At that time,
it was very difficult to build
and operate a daycare center in New York state
unless you had a lot of money,
and Malkin did not.
Before you can take care of your first child,
you need a state license,
and that takes about a year.
What’s more,
you can only get a permit once you’ve passed a lot of testing,
which means you need a building space that meets all of your fire,
safety and health requirements.
As a result,
you will have to pay rent and build
for a long period of time with no income
while your application is processed.
Without a license,
you will lose your investment.
Even if there’s a license,
that’s just the beginning.
You need to keep investing to build the business.
After my first meeting with Malki,
I knew that she had very little chance of success – 1/10 at most.
She has no money,
no business experience,
and no supportive partner.
She has never had employees or customers,
and has never negotiated a deal.
She will face a lot of difficulties
no matter what kind of business she decides to set up.
Therefore, a daycare center seems to be out of her reach.
But I absolutely don’t want to discourage people
when they’re chasing their dreams,
and Malki is determined.
Therefore, I agree to guide and give her advice.
We set out to find out what happens
when running a daycare center.
Knowing that obstacles can be daunting,
in order to minimize financial risks, we decided
that buying the premises would definitely be better for Malki than renting.
Because without a permit,
she could still sell the property
and not be stuck on a long-term lease.
Therefore, Malki will have to find the premises,
figure out how to negotiate to buy it,
make the necessary upgrades,
cover the mortgage costs,
and do other things to ensure the startup succeeds.
when or rather,
if the license is approved.
What I want to talk about here is market research,
fundraising,
pricing, etc.
And more importantly,
she has to do all of that in her spare time
because she can’t stop current job.
I thought Malki would give up when she realized the workload,
but I was wrong.
She immediately dived into market research,
researching all the childcare centers in the area.
She befriended an experienced child care center operator in another state,
who gave her invaluable advice.
She took as many different licensing forms
as she needed and learned the steps it took to get licensed.
Meanwhile,
she kept in touch with all her other acquaintances
to find the necessary financing,
eventually raising about $150,000,
most of it from family and friends.
But Malki’s boldest move was her real estate negotiation.
She selected a location that was about to be vacant.
The owner wants to move to another building
and wants flexibility in transferring the property.
Malki can meet those needs.
What she needs is time.
Since she’s never been in business,
she doesn’t immediately get a mortgage,
and can only make a small down payment,
but she thinks her position will get better
after the daycare center has been open for a while.
So they made a deal:
Malki agreed to temporarily mortgage the premises
and pay a small amount on top of the requested amount.
The seller will give her a second mortgage to spread the difference.
After a certain period of time,
Malki will re-mortgage and pay the second mortgage.
In addition,
she and the seller agree on a certain due date to help her
through the licensing process before payments begin.
As a result,
her costs in the start-up period were much lower than we anticipated.
In the end,
Malki took two years to finish everything.
Her daycare center opened in July 1999.
It was a huge success and Malki feels like she has achieved her goal.
But in fact,
the biggest challenge is still ahead.
Why? Because everything changes
when you start a business and look for revenue.
There will be difficulties in that process
because Malki will certainly be under a lot of pressure
before having to quickly get customers.
However, the reality is that
before there are customers,
a delay is not necessarily a disaster.
If the product you ordered is not delivered on time,
you may feel frustrated and angry,
but the consequences are not too severe.
But things are completely different
when you are open for business
and your employees are not responding
to a customer’s need or the customer is asking
for something you cannot provide.
Then you will have to make a decision,
to take action.
You find yourself suddenly flooded with problems,
all of which require immediate resolution.
If you’re a first-time entrepreneur,
you’ll tend to take every problem with the same response:
panic.
Even if in reality most of those problems can be solved.
But then for you,
it’s all a disaster.
To be successful,
you must overcome that panic.
Not only do you have to increase your confidence in your ability to handle problems,
but you have to change the whole way you think about them.
You must learn to accept
that endless chains of trouble are an inevitable part of business,
and you must learn to capitalize on that process.
But how will you do it?
By finding joy and excitement in finding solutions to those problems.
Some people just can’t make that transition,
and I think Malki is one of them.
Because, she feels uncomfortable when making decisions.
She likes to have lots of ideas and mull over them.
This feature can be nice in some cases,
but it doesn’t make the startup process any easier.
In fact,
Malki encountered a lot of difficulties in the first few months.
She was overwhelmed and felt discouraged.
She doesn’t know how to deal
with the problems
with the child’s parents.
She thought she wouldn’t be able to find the necessary staff.
The people she hires often come late,
leave early,
she is forced to find a replacement
so that the ratio of staff to the number
of children still meets the requirements of the board.
Every obstacle seems insurmountable
and every problem seems deadlocked.
After overcoming a few obstacles to open the center,
Malki is frustrated again to discover
that she is facing more difficulties than ever.
I realized that she had these problems simply
because she was unprepared for the business.
Luckily, we’ve designed an “escape door” for her.
Malki can still sell the property
and move on to something else
without the dire financial consequences,
as Elaine once reminded her.
But Malki continued,
gradually her way of thinking began to change.
I could see the change in the way
she presented the matter to Elaine and me.
Instead of focusing on how bad the situation was,
she started coming to us with possible solutions,
and asking for our opinion.
At that time,
her business was also progressing so
of course there would be more problems,
but her sense of panic had gradually disappeared.
By the end of the first year,
she was completely under control.
That was about a decade ago.
Now, her childcare center has been a huge success
and is extremely popular.
Parents wait in line to register their children to attend the center.
As for Malki, she “enjoys” the business process more than ever.
She has admitted that
she hated it at first and there were times
when she wondered if she could hold out.
But she persisted,
and she gradually changed her perspective as she began
to realize that she could solve any problem that arose.
Is there a turning point to that change for Malki?
“Yes,” she said, ”
that’s when Elaine said I could give up.”
Malki doesn’t know what keeps her going,
neither do I.
But let’s call it passion,
grit,
perseverance,
persistence,
or simply stubbornness.
Whatever it is and where it comes from,
it is the most important quality an entrepreneur needs.
And it determines whether we succeed or not.
*********************
KEY POINTS
First: Those who persevere will succeed.
Be resilient and ready to accept failure.
That’s how to become a true trader.
Second: You learn by stopping making excuses
and delving into why mistakes happen.
Third: Focus and discipline are more important than identifying opportunities,
but they must be balanced with flexibility.
Fourth: The solution is never right in front of your eyes.
You need to learn to find them from outside your perspective.
